MNCS Morning Navigator

14 September 2021

MNCS Morning Navigator September 14, 2021

Global Market Highlight

DJIA strengthened by +0.76% on Monday (13/09) followed by S&P 500 (+0.23%), while Nasdaq slipped by -0.07%. The Wall Street closing was mixed as the market participants are focused on the likely passage of Joe Biden's USD3.5 trillion budget package, which is expected to include a proposed corporate tax rate hike to 26.5% from 21%. Today the market will be looking forward to several data releases such as: 1) US Core Inflation Rate YoY; 2) UK Employment Change; 3) China FDI (YTD) YoY.

Domestic Update
• Government will conduct an auction for 7 series of debt securities on Tuesday (09/14). The indicative target is set at IDR21-31.5tn. MNCS Comment: We are optimistic that the government can successfully issue all 7 debt securities to be auctioned today. However, we expect that the incoming bids value would not be as much as the previous auction as investors keep eye on September Fed's policy meeting despite stable rupiah and low external pressure.
• Furthermore, there was an addition of 187 new Covid-19 cases in Jakarta yesterday.

Company News
1. BBRI IJ officially became Ultra Micro Holding together with PT Pegadaian and PT Permodalan Nasional Madani (PNM). The establishment of the holding aims to provide more complete and inexpensive financing as well as a wider reach for the ultra micro sector (Emitennews). MNCS Comment: We believe that the ultra micro holding formation will be a positive long-term catalyst for BBRI, especially in maximizing the ultra micro segment, which has 57 million customers. The management target is to reach a minimum of 18 million micro-ultra customers in Indonesia. Currently BBRI is trading at 18.03x/2.32x PE/PBV levels.
2. KRAS IJ increased the capital funding to PT Krakatau Wajatama (KWT) by IDR987.12 billion by including shares in PT KHI Pipe Industries and PT Krakatau National Resources (KNR). The action aims to develop a steel solution business through strengthening downstream products (Emitennews). MNCS Comment: We believe that it might be able to bring value added towards the goods sold especially with the increase of infrastructure demand globally. Currently KRAS is trading at 10.68x/1.23x PE/PBV levels.
3. SAME IJ has purchased 167.34 million shares of PT Kedoya Adyaraya Tbk (RSGK) worth by IDR287.82 billion or 18% of RSGK’s shares ownership. MNCS Comment: We see this acquisition plan as a positive catalyst for SAME in expanding health services in Indonesia. Currently RSGK manages 2 hospitals type B and C. SAME is currently trading at 32.57x/3.49x PE/PBV.

IHSG Updates
JCI weakened by -0.11% to 6,088.157 on Monday (13/09) while net foreign buy reaching IDR43.70 billion. JCI closed lower led by the tech sector (-1.60%), followed by the basic industry (-0.74%). On the other hand, the transportation sector increased by +2.11%, followed by the cyclical sector (+1.14%). The decline in the JCI was in line with other global markets, as data figures of high inflation that might trigger the Fed to taper faster this year. Meanwhile, the Rupiah weakened at IDR14,253/USD level on the spot market. We estimate the JCI will move in the range of 5,982-6,150. Today's recommendation: ELSA, ERAA, ICBP, IMAS.

Corporate Action
Right Issue: SDRA (IDR719/share)
Public Expose: BNLI

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